Shell Plc announced Thursday that it has signed several oil and gas deals with Venezuela, marking a significant step toward restarting development of the offshore Dragon gas field after years of delays. The agreements aim to jumpstart the long-stalled project, with Trinidad's Energy Minister Roodal Moonilal confirming that first gas exports to Trinidad are now expected in the third quarter of 2027.

Dragon Field Development and Supply Gap Solution

The Dragon gas field contains reserves of approximately 4.5 trillion cubic feet of gas. Shell plans to send this supply to Trinidad for processing and export, which could help address a critical supply shortage at Trinidad's Atlantic LNG plant. LSEG figures show the facility shipped 9 million metric tons in 2025, significantly below its 12 million capacity.

The Atlantic LNG plant represents a crucial asset for both Shell and BP, with each company controlling 45% stakes while Trinidad's National Gas Company owns the remaining portion. The facility accounted for about 10% of Shell's total global LNG production last year and was responsible for 15% of BP's LNG exports.

Regulatory Changes and Market Timing

The deals come as Washington recently eased restrictions on Venezuela's energy sector, issuing broad blanket licenses that allow companies to operate despite ongoing sanctions. In February, a Shell spokesperson described the new U.S. exploration licenses as a "positive signal" that moved the project forward. CEO Wael Sawan indicated the opportunity might be "activated within months."

Market conditions have created additional urgency for new supply sources. On Friday, turmoil in the Middle East tightened the gas market as buyers scrambled for alternate cargoes. Energy Aspects analyst Kesher Sumeet noted that "cargoes have started to be diverted to Asia," highlighting the potential value of new Atlantic Basin supply, even though the Dragon project remains some time away.

Partnership Structure and Technical Agreements

Shell's announced deals cover both offshore natural gas and onshore oil and gas prospects. The company has established technical and commercial agreements involving Venezuelan engineering outfit VEPICA, U.S.-based KBR, and oilfield services group Baker Hughes.

Other energy companies have also maintained or expanded their Venezuelan operations. BP is advancing the Manakin-Cocuina cross-border gas initiative alongside Trinidad. Chevron and Repsol stand out among foreign companies that have either grown or maintained their stakes since the U.S. loosened sanctions earlier this year.

Historical Challenges and Recent Policy Changes

The Dragon project has faced numerous setbacks over the years. Shifting U.S. policies have repeatedly disrupted the timeline, while Venezuela froze the field even after receiving an earlier American approval. Caracas subsequently suspended energy deals with Trinidad, adding to the project's delays. Years of neglect and aging equipment in Venezuela continue to create uncertainty about the project's future.

Venezuela implemented significant policy changes in January with an oil reform that slashed taxes and increased the oil ministry's authority while loosening restrictions for private producers. These changes represent an effort to attract foreign investment back to the country's energy sector.

U.S. Interior Secretary Doug Burgum's two-day visit this week suggested potential for further regulatory relaxation, with hints at additional mining licenses in the pipeline.

In February, CEO Sawan characterized the project as "good for the Venezuelan people" and "great for the Trinidadians." For Shell, the deal represents an opportunity to boost output at a plant that remains crucial to its LNG business operations.

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